Dynamic Allocation Fund

Objective and investment policy

Objective

The fund aims to provide positive total returns (the combination of income and capital growth) over any three-year period from a flexibly managed portfolio of assets invested around the world. There is no guarantee that the fund will achieve a positive return over any period, and you may not get back the amount you originally invested.

Investment policy and strategy

Core investment: The fund is typically invested in a mix of assets, including company shares, bonds and currencies.

The fund typically invests in assets indirectly via derivatives. It may also invest in assets directly or through other funds. Using derivatives to invest also allows the fund to create ‘leverage’, meaning that the fund can gain exposure to investments that exceed its value, thus increasing potential returns (or losses) in both rising and falling markets.

In addition, derivatives are used to reduce risk and costs and to manage the impact of changes in currency exchange rates on the fund’s investments.

Other investments: The fund also invests in convertibles and property-related securities. It may also hold cash, warrants, and money market instruments (for example, debt due to be repaid within a year).

Strategy in brief: The fund is managed with a highly flexible investment approach.

The fund manager has the freedom to allocate capital between different types of assets in response to changes in economic conditions and asset prices. The approach combines in-depth research to work out the ‘fair’ value of assets over the medium to long term, with analysis of the market’s short-term reactions to events, to identify investment opportunities. The fund seeks to manage risk by investing globally across multiple asset classes, sectors, currencies and countries. Where the investment manager believes opportunities are limited to a few areas, the portfolio may be very concentrated in certain assets or markets. The fund manager will normally hold at least 30% of the fund in euro, and at least 60% in US dollar, sterling and euro combined.

Glossary terms

Bonds: Loans to governments and companies that pay interest.

Convertibles: Bonds issued by companies that usually pay a set rate of interest and which can be exchanged for predetermined amounts of company shares.

Derivatives: Financial contracts whose value is derived from other assets.

Warrants: Financial contracts which allow the fund manager to buy stocks for a fixed price until a certain date.

Risks associated with the fund

The value of investments and the income from them will rise and fall. This will cause the fund price, as well as any income paid by the fund, to fall as well as rise. There is no guarantee the fund will achieve its objective, and you may not get back the amount you originally invested.

The fund may use derivatives to gain exposure to investments exceeding the value of the fund (leverage). This may cause greater changes in the fund’s price and increase the risk of loss.

The fund may use derivatives with the aim of profiting from a rise or a fall in the value of an asset (for example, a company’s bonds). However, if the asset’s value varies in a different manner, the fund may incur a loss.

Changes in currency exchange rates will affect the value of your investment.

The fund will invest in emerging markets which are generally smaller, more sensitive to economic and political factors, and where investments are less easily bought and sold. In exceptional circumstances, the fund may encounter difficulties when selling or collecting income from these investments, which could cause the fund to incur a loss. In extreme circumstances, it could lead to the temporary suspension of dealing in shares in the fund.

If the share class is hedged (H share class), it aims to mirror the performance of another share class. We cannot guarantee that the hedging objective will be achieved. The hedging strategy will limit holders of the hedged share class from benefiting if the hedged share class currency falls against the euro.

From time to time the fund may be highly concentrated in one or a few investment strategies, which could result in large price rises and falls.

Where market conditions make it hard to sell the fund’s investments at a fair price to meet customers’ sale requests, we may temporarily suspend dealing in the fund’s shares.

Some transactions the fund makes, such as placing cash on deposit, require the use of other financial institutions (for example, banks). If one of these institutions defaults on their obligations or becomes insolvent, the fund may incur a loss.

Other information

The Fund allows for the extensive use of derivatives

Performance

The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested. The level of any income earned by the fund will fluctuate. Past performance is not a guide to future performance.

Source: Price: State Street. Performance: Morningstar. Performance figures are on a price to price basis with income reinvested. Performance figures may not reflect all relevant charges.

Please note that the Morningstar Category performance data in this tool where shown, is from the default Morningstar database, which contains all the share classes for each fund available across Europe, Asia and Africa. This can differ from the comparative sector data in M&G factsheets which is from the same database, but showing only the most appropriate share class to represent each fund, and for just those funds available in Europe. Neither Morningstar nor its Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the Information on the Web site, including, but not limited to Information originated by Morningstar, licensed by Morningstar from Information Providers, or gathered by Morningstar from publicly available sources. There may be delays, omissions, or inaccuracies in the Information.

News

Shareholders voted in favour of the proposed cross border merger of the M&G Dynamic Allocation Fund into the M&G (Lux) Dynamic Allocation Fund at the Extraordinary General Meeting on Friday 9 February 2018.

Fund Team

Graziano Creperio
- Investment specialist

Graziano Creperio joined the M&G Multi Asset team as an associate investment specialist providing support for the M&G multi-asset funds. He initially joined M&G in 2012 as a fund data analyst and was later promoted to senior data specialist. Prior to joining M&G, Graziano worked as a portfolio data analyst at Morningstar. He holds a MSc in management and a BA in economics from Bocconi University in Milan. He also studied at Babson College in Boston and Jiao Tong University in Shanghai.

Need further information?

For Investment Professionals only. Not for onward distribution to any other type of client. No other persons should rely on the information contained on this website. Content should therefore be shared responsibly with other investment professionals. The value of investments will fluctuate, which will cause fund prices to fall as well as rise and investors may not get back the original amount invested.